QUANGO REVIEW BOTCHED ACCORDING TO SELECT COMMITTEE REPORT
Public Administration Committee says that reform of quangos has been a lost opportunity and the Bill is poorly drafted
But reforms on-going
Francis Maude, the Cabinet Office Minister, has been driving through reforms in the delivery of public services to drive down costs, to improve efficiency, deliver value for money, streamline public procurement and to encourage greater transparency and accountability. He also wants to see, at the end of this process, a greater role for small and medium sized enterprises in public service delivery. Reforms have included a partial cull of the Quangocracy, though more barbecue, say critics. than the widely anticipated bonfire. Although the process of reform is on-going organisations such as the British Council , the TDA and NCSL (the SSAT now has less public funding to manage but is still competing unfairly with non-subsidised private and not for profit operators in the markets here and abroad) have emerged largely unscathed from the review although critics want these organisations to be cut down to size , made more transparent and accountable and for them to demonstrate, against clear performance benchmarks, that they deliver value for money for taxpayers and that the services they provide cannot be provided better and cheaper by the private and not for profit providers ,or indeed social enterprises.
The Public Administration Committee has been looking at reforms affecting quangos and has just published a report ‘ Smaller Government: Shrinking the Quango State’ . The verdict is that the Government’s “Bonfire of the Quangos” has been “poorly managed” resulting in badly drafted legislation that won’t deliver significant cost savings or improved accountability. Bernard Jenkin, the committee’s Conservative chairman, says “the whole process was rushed and poorly handled and should have been thought through a lot more”. Pre-election promises from the Conservatives about cuts to costly bureaucracy “created a false expectation that the review would deliver greater savings” than appear likely. And to make meaningful savings, the government needs to examine not just how the quangos operate, but what they exist to do. In many cases, the committee argues, functions could have been transferred to charities or mutuals. “This was a fantastic opportunity to help build the big society and save money at the same time,” Mr Jenkin says. “But it has been botched.”
The Committee report claims that the Public Bodies Reform Bill currently with the Lords aimed at delivering these reforms was badly drafted. And it promised to issue a further detailed report on the Bill once the Lords have finished their scrutiny. The report concluded “ The Government should have reassessed what function public bodies are needed to perform and transferred many more of these activities to charities and mutuals. Doing so would have helped explain more clearly its vision for a Big Society, giving these organisations the ability to provide more government services. It should also have used the review to get control of some activities of public bodies that provide questionable benefit to the taxpayer, most notably the use of public funds for lobbying and public relations campaigns.” The Committee added that ‘Deciding which bodies can be moved into the private and voluntary sector should form only part of the Government’s review. It should also reconsider what activities public bodies should continue to engage in. Some public bodies have allowed their remit to increase over the years and there is a need to refocus them on their core functions. Identifying the essential activities of these bodies will both make them more efficient and reduce cost. This principle must be embedded in future reviews. (Paragraph 114)
The Committee intends to bring forward proposals to strengthen the Select Committees’ role in scrutinising changes to public bodies in its future report on the detail of the Public Bodies Reform Bill.
The Committee though has failed to address the issue of the unfair activities of quangos in the markets both here and abroad which disadvantage non-subsidised private and not for profit providers. In short, Quangos use taxpayers money to cross subsidise their operations in order to under cut other competitors bids for contracts and quangos, such as the SSAT and British Council, are frequently awarded contracts that are not put out to open tender which apart from being unfair, cannot ensure value for money for taxpayers. Francis Maude has, though, been made aware of providers concerns and their calls for urgent reform.
Mr Maude has rejected the Committees criticism, promising to “see the reforms through”. The Committee welcomed the Minister’s comments which indicate that future reviews will include considerations about efficiency and value for money of quangos along with his assurances that he would be able to devise a more cost-effective review system than previous efforts.
Reforms are on-going driven by the Cabinet Office.
Poor public sector productivity places quangos in the frame
Close to 90% of our government is carried out now not by ministerial departments, but delegated to a vast quangocracy, made up of hybrid organizations, operating below the waterline, with limited supervision and scrutiny by Parliament .
It is bizarre that in this new age of transparency our Parliamentarians ,whose job is to scrutinize the Executive and hold it to account, find their expenses are under detailed scrutiny, while those who run our quangocracy, the delivery agents, largely escape any such scrutiny. Do they deliver public value? Who knows?
They operate in various guises and under differing legal umbrellas , some are statutory public bodies, others charities and some even operate as private companies (allowing them to pretend that they are not quangos, to avoid too close a scrutiny of the way they spend our money -think SSAT) all with different standards of transparency and disclosure of information.
One thing they have in common though is that they receive taxpayers money and implement Government policy, but are not, for the most part, being held directly accountable for their outputs (often left free, incidentally, to measure their own performance) . Matthew Flinders 2007 book Delegated Governance and the British State: Walking Without Order is a real eye- opener. Flinders argues that the British state is ‘walking without order’ due to a general acceptance of the logic of delegation without any detailed or principled consideration of the administrative of democratic consequences of this process. He reveals that there are about 5,000 quangos nationwide and some 1,500 centrally.
For sure, Quangos do some good work. They can organise lavish conferences for starters. They help identify and disseminate best practice. But it is not always clear why, if there is such demand for their services, not for profits and the private sector couldn’t do their work just as well and at less cost. Too often quangos are given work that is not put out to open tender. How does this secure best value for taxpayers? Indeed securing best value for taxpayers is not, it would seem, high on their list of priorities. Clearly it should be.
Quangos bring in outside expertise, create a buffer zone round political hot potatoes and cut ministerial overload. They also provide a useful network to enable Ministers to dispense political patronage as they appoint quango heads. (So much for merit, and recruiting the best manager for the job). Quangos are responsible for ensuring that centrally driven initiatives are implemented. But many of these have been seen to have failed . They are at arms length from Departments so this means that if things do go badly, which they often do, Ministers can create space between them and the offending Quango. In this game of smoke and mirrors and passing the buck the one casualty is accountability. Historically, opposition parties always say that there will be a bonfire of quangos when they win power but the reality unfortunately can be rather more prosaic. In truth, more barbecue than bonfire. The Tories cut the quango count by 50 per cent when last in power. However, the cost of the remaining bodies went from £6bn to £22bn. This Government in its first 10 years in power, then created 300 new bodies as the public sector expanded and the private (wealth creating) sector contracted.(still happening by the way)
The education sector, of course, has its own alphabet soup of acronyms making up its own quangocracy. But given that we are currently in dire economic circumstances, and public finances have been shot through, there is a growing feeling that the time has come to seriously look at the cost effectiveness of these quangos. Indeed, whoever wins office next year , it is hard not to see how they will avoid making (big) cuts. Sue Cameron of the FT informs us that the Government (and Tories) have been studying Matthew Flinders book in some detail. The Truth is that they know there is wastage and inefficiencies; Cameron has talked about it in some detail. But knowing it is the easy part. Knowing where to apply the scalpel, without significant political fall out is the hard bit.
More generally our public services have experienced a real terms funding increase of 55 per cent, financed by an increase of 5 per cent of GDP in public expenditure since 2000. Yet public sector productivity has continued to fall: by 3.4 per cent over the last ten years, compared to the private sector’s 27.9 per cent productivity gain over the same period. Some of the blame for this rests with the bloated quangocracy. On education productivity the ONS said on 1 December that the volume of education inputs – how many resources the government puts in – rose by 33 per cent between 1996 and 2008. The volume of outputs – how much the state gets in return – also increased by 33 per cent. As a result, productivity – a measure of efficiency that divides output by input – stayed the same. Implicit in the ONS report is that increased spending should have led to a sustained rise in productivity and that standards in schools ought to have increased by a significantly bigger margin than they have.
Measuring productivity in public services can be a challenge and is an inexact science (though apparently we pride ourselves in being world leaders in public service productivity measurement) , but there are very few observers out there who believe that the massive investment in education (it rose, at current prices, from £29 billion in 1996 to £63.9 billion last year — an annual rate of increase of 6.8 per cent.) has delivered the expected returns and the education quangocracy cannot avoid sharing some of the blame for this .
So, fundamental reforms seem likely. The fact is that, more than piecemeal reform, we need a transformation in how Government does business and a debate about where the boundaries of the state should lie. The challenge is to deliver more with less, getting more resources to the frontline by eliminating intermediary organizations and all processes that do not add value. So where does that leave some of our quangos?
CREATING PUBLIC VALUE
Have some public servants lost sight of what they are there for?
The central purpose of all publicly owned and funded organisations should be to increase public value. In return, organisations gain legitimacy from the public they serve, and – ideally – leadership, innovation, improved service, greater efficiencies and greater job satisfaction should follow.
The concept of public value is an attempt to measure the total benefits which flow from government action. Like private value, it incorporates the benefits derived from personal consumption of public services. Public servants and the organisations they populate must give a continuous account of how they use taxpayers’ money and how they add value. Too many, it has to be said, don’t bother. Parliament which is doing a poor job of holding itself to account, let alone the Executive and its agencies, has seemingly lost its way, but may slowly be coming to terms with this fact. The result in the meantime is the democratic deficit. That is the perceived gap between what the citizens expect from their public servants and what they in fact deliver. There is little doubt that the democratic deficit exists and along with it a growing cynicism among the electorate, which is unhealthy for our democracy.
But it is unfair simply to focus on MPs in this respect.
Too many civil servants and quangocrats who have largely evaded the accountability spotlight seem not even to pay lip service to the concept of public value nor are held to account for the way they disburse taxpayers money.
Far too many Quangos for instance fail the transparency test in that they only measure their inputs ie how many conferences they run not their outputs (those actions that for instance measurably improve performance) and pay too little attention to the longer term outcomes of their activities. One of the leading thinkers on public value is Mark Moore who published Creating Public Value: Strategic Management in Government in 1995.It had a significant impact at the time and has influenced among others Professor Michael Barber who refers to it several times in is book Instruction to Deliver, his account of how he and the Delivery unit sought to improve public service delivery across the board with mixed results. Moore’s strategic triangle posits that a strategy for a public sector organization must meet three broad tests It must: firstly be aimed at creating something substantively valuable (i.e. constitute public value); secondly be legitimate and politically sustainable (i.e. attract sufficient ongoing support – and concomitant resources – from political and other stakeholders and third be operationally and administratively feasible. Public value is not that easy to define but The Work Foundation, which has done much good work in this area had a good stab at it .Public value it says is what the public values, and it is the role of public managers to help determine through the democratic processes of deliberation and public engagement what social outcomes are desirable. It is through such processes that public managers can help to articulate collective citizens’ preferences and thereby redress the ‘democratic deficit’ between public services and citizens. It is this very deficit – which emphasizes the legitimacy of public institutions and the public’s trust in them to provide high-quality services to the wider citizenry and meet high customer standards – that gives us the key reasons to be interested in public value as a concept. Crucially, Public value encompasses not only outputs but also outcomes, that is, impacts upon those who enjoy the value/good in question or upon states of nature important to those people. Moore’s critique finds ‘Public value’ focuses on: a wider range of value than public goods; more than outputs; and what has meaning for people, rather than what a public-sector decision-maker might presume is best for them. (Whitehall knows best). More significantly, it connotes an active sense of adding value, rather than a passive sense that is merely of safeguarding the public interests. The Public value approach has the potential to offer a broader way of measuring government performance and guiding policy decisions. Clearly there may well be some difficulty in ‘operationalising’ public value and developing a wide range of measures that could appropriately capture the value in differing public services. Indeed new public value measures could mean a growth in monitoring and auditing exercises at a time when many want to move in the opposite direction. And some services are not easily measurable. But within public services you have some areas now which are very heavily monitored and others where the exact opposite occurs, and these imbalances could very easily be addressed. Moore said that “Public Service managers need an account of the value their organizations produce. Each day, their organizations’ operations consume public resources and their operations produce real consequences for society – intended or not. If the managers cannot account for the value of these efforts with both a story and demonstrated accomplishments then the legitimacy of their enterprise is undermined and, with that, their capacity to lead’ (Moore 1995: 57).
You don’t have to be a political scientist to realize that many of our public institutions have lost sight of the need to justify their existence, measure their performance, show transparency and accountability and demonstrate to taxpayers that that they add value and positively effect outcomes. Too often when they do attempt to measure their performance they choose the means of measurement. The failure to pursue public value applies to many though not all Government departments and quasi government agencies.
Politicians and civil servants should revisit the concept of public value to help reduce the democratic deficit. It can help too to guide them in rationalizing the bureaucracy, in cutting costs and importantly help them stem the resulting corrosive cynicism that increasingly characterizes the mood in many sections of society towards public servants generally, reflected, of course, in the media.
Much of this isn’t warranted or fair. But then again rather too much probably is.
MORE BARBECUE THAN BONFIRE
Tories attack Quangos
Keys are accountability, effectiveness and control over expenditure
The government says there are 790 quangos. Others , including the Taxpayers’ Alliance, say there are well over 1,000.
As a result the estimated cost varies from £34bn to about £65 bn.
David Cameron promised on 6 July, at a Reform think tank event, to take a ‘forensic’ look at all Quangos to establish whether they are necessary .He has asked shadow cabinet members to look at the quangos within their remit and to report back to him. Reform had offered a hit list of Quangos that ought to be abolished at the time of the last Budget.
He believes that much of the frustration with politics and politicians is because people feel that they cannot influence government not least because so much of Government operates through arms length, near to Government quangos which are not accountable to the electorate. Indeed, it is not at all clear to whom they are accountable.
In short people are fed up with bureaucrats lording it over them, not least because one cant get rid of them if the fail, which is not uncommon.
Governments have progressively devolved responsibilities to them as executive agencies and they have become more politically active, actually formulating policy.
But, electors feel that they have no control over them, although their decisions increasingly affect all our lives.
Cameron said “Too many state actions, services and decisions are carried out by people who cannot be voted out by the public, by organisations that feel no pressure to answer for what happens – in a way that is completely unaccountable.” They control at least £65 billion of public money and 68 quango heads earn more than the Prime Minister, Cameron said.
He wants three basic questions to be asked of quangos to see if they are fit for purpose. First are they absolutely necessary in terms of the specialist technical support and advice they bring to public service delivery? Next, do they fulfil an important, politically impartial role (which couldn’t be fulfilled by a Government department).
And ,finally are they important in establishing objective facts that can help inform policy and practice? I would simplify this to- are they vital for regulation, first, and second do they have a measurable impact on the consumer of public services, ie in education can they demonstrate that they impact on the learner .
If not either abolish them or if you feel the service is vital for instance in providing independent data, free from political manipulation, which is so common nowadays, then look to the private and not for profit sectors. Though reluctant to be drawn into naming ineffective quangos he did mention the schools’ Qualifications and Curriculum Development Agency (QCDA), which develops the national curriculum. It will be closed. But another quango, Ofqual, the exams regulator, which has already proved controversial, would be retained although its work will be closely monitored. The Tory approach leaves a question mark over the alphabet soup of quango acronyms-the TDA, NCSL, SSAT etc. The lack of accountability of quangos is unanswerable. To get even the most basic of information from many of them you have to invoke the freedom of information act. They fall back on the old oft used ‘commercial in confidence’ defence .
Few benchmark their performance and, or ,measure their ouputs in any meaningful sense . They fail to publish on the web regular, informative annual reports listing the remuneration of their executives, how they meet their targets, which more often than not they have set themselves. They increasingly compete too with the private and not for profit sectors for public contracts but are grant funded, unlike their competitors ,who have to take on greater commercial risk. Many are granted contracts without the need to compete in competitive tenders and when they do compete they can conceal the real cost of their bids , cross subsidise and often enjoy access to information for their bids, denied to their competitors, so giving them unfair advantage. Their presence in the market moreover stunts market development and increases the risk of market entry. It’s all an almighty dogs’ dinner of a mess.
There is little accountability, transparency or competitive neutrality in evidence. Quango heads just don’t get it. They might if their expenses were to be looked at a little more closely.
We don’t see much evidence of the pursuit of best (or public) value either. The Tory approach has much merit. But they are already signalling their caution.
Indeed, it is hard to envisage a wholesale rationalisation of the quangocracy, although this is long overdue and the right approach in our current economic circumstances. However, it will require huge political will and leadership to push through reforms against vested producer interests and the Tories will have to take on the public service unions. The big question is -do they have the bottle?
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